Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2013

or

£

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____________ to _____________

Commission File Number: 0-261

Alico, Inc.

(Exact name of registrant as specified in its charter)

Florida

59-0906081

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

10070 Daniels Interstate Court, Fort Myers, FL

33913

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone
number, including area code: 239-226-2000

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. R Yes £
No

Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). R Yes£ No

Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions
of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (Check one):

Large accelerated file £

Accelerated filerR

Non-accelerated filer £

Smaller reporting company £

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). £ Yes R
No

There were 7,350,455 shares of common stock,
par value $1.00 per share, outstanding as of January 31, 2014.

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Statements of Comprehensive
Income (unaudited) for the three months ended December 31, 2013 and 2012

Condensed Consolidated Balance Sheets as of
December 31, 2013 (unaudited) and September 30, 2013

Condensed Consolidated Statements of Cash Flows
(unaudited) for the three months ended December 31, 2013 and 2012

Notes to Condensed Consolidated Financial Statements
(unaudited)

Item 2. Management’s Discussion and
Analysis of Financial Condition and Results of Operations

Alico Inc. (“Alico”) and its wholly
owned subsidiaries (collectively, the “Company”) is an agribusiness and land management company. The Company owns approximately
130,800 acres of land in six Florida counties (Alachua, Collier, Glades, Hendry, Lee and Polk). Our principal lines of business
are citrus groves, improved farmland including sugarcane, cattle ranching and conservation, and other operations which includes
rock mining.

Basis of Presentation

The accompanying (a) condensed consolidated
balance sheet as of September 30, 2013, which has been derived from audited financial statements, and (b) unaudited condensed
consolidated interim financial statements (the “Financial Statements”) of the Company have been prepared in accordance
with accounting principles generally accepted in the United States of America (“GAAP”). The Financial Statements include
all adjustments, consisting of normal and recurring adjustments, which in the opinion of management were necessary for a fair presentation
of the financial position, results of operations and cash flows for the periods presented. The results of the interim period are
not necessarily indicative of the results for any other interim periods or the entire fiscal year.

The Financial Statements have been presented
according to the rules and regulations of the Securities and Exchange Commission (“SEC”), instructions to Form 10-Q
and Rule 10-01 of Regulation S-X. Certain information, footnotes and disclosures normally included in annual financial statements
prepared in accordance with GAAP have been condensed or omitted in accordance with those rules and regulations. The Company believes
that the disclosures made are adequate to make the information not misleading. The Financial Statements should be read in conjunction
with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K
for the year ended September 30, 2013.

Certain reclassifications have been made to
the prior years’ consolidated financial statements to conform to the fiscal year 2014 presentation. These reclassifications
had no impact on working capital, net income, stockholders’ equity or cash flows as previously reported.

Use of Estimates

The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates based upon future
events. The

6

Company periodically evaluates the estimates. The estimates are based on current and expected economic conditions,
historical experience and various other specific assumptions that the Company believes to be reasonable.

Seasonality

The Company is primarily engaged in agriculture,
which is of a seasonal nature and subject to the influence of natural phenomena and wide price fluctuations. Historically, the
second and third quarters of our fiscal year generally produce the majority of our annual revenue and our working capital requirements
are typically greater in the first and fourth quarters of our fiscal year coinciding with our planting cycles. The results of the
reported period herein are not necessarily indicative of the results for any other interim periods or the entire fiscal year.

Recent Accounting Pronouncements

The Company does not believe that any recent
accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, or the SEC would have
a material effect on its financial position, results of operations or cash flows.

Note 2. Inventories

A summary of the Company’s inventories
is presented below:

(in thousands)

December 31,

September 30,

2013

2013

Unharvested fruit crop on the trees

$

18,035

$

16,329

Unharvested sugarcane

9,640

11,728

Beef cattle

2,018

1,200

Other

59

146

Total Inventories

$

29,752

$

29,403

Note 3. Property, Buildings and Equipment,
Net

Property, buildings and equipment consisted
of the following at December 31, 2013 and September 30, 2013:

(in thousands)

December 31,

September 30,

2013

2013

Breeding herd

$

12,844

$

12,234

Buildings

12,994

11,587

Citrus trees

31,724

34,188

Sugarcane

18,788

16,199

Equipment and other facilities

48,805

47,278

Total depreciable properties

125,155

121,486

Less accumulated depreciation and depletion

(71,965

)

(71,857

)

Net depreciable properties

53,190

49,629

Land and land improvements

78,278

81,442

Net property, buildings and equipment

$

131,468

$

131,071

7

Assets held for sale

In December 2013, the Company’s Board
of Directors approved listing certain parcels of real estate for sale in Polk county totaling approximately 3,200 acres, including
approximately 80 acres of active citrus groves. As a result, the Company reclassified the net book value of the properties to assets
held for sale as of December 31, 2013. The estimated fair value of the properties exceeds their net book value and no impairment
was recognized as a result of the reclassification.

Note 4. Income taxes

The Company’s effective tax rates were
43.7% and 38.0% for the three months ended December 31, 2013 and 2012, respectively.

The Company applies a “more likely than
not” threshold to the recognition and non-recognition of tax positions. A change in judgment related to prior years’
tax positions is recognized in the quarter of such change. The Company had no reserve for uncertain tax positions at December 31,
2013 and September 30, 2013. The Company recognizes interest and/or penalties related to income tax matters in income tax expense
and in income taxes payable.

Note 5. Long-Term Debt

Outstanding debt under the Company’s
various loan agreements is presented in the table below:

(in thousands)

Revolving Line of Credit

Term Loan

Total Credit Facility

December 31, 2013

Principal balance outstanding

$

—

$

35,500

$

35,500

Remaining available credit

$

60,000

$

—

$

60,000

Effective interest rate

2.42

%

2.67

%

Scheduled maturity date

October 2020

October 2020

Collateral

Real Estate

Real Estate

September 30, 2013

Principal balance outstanding

$

—

$

36,000

$

36,000

Remaining available credit

$

60,000

$

—

$

60,000

Effective interest rate

2.43

%

2.68

%

Scheduled maturity date

October 2020

October 2020

Collateral

Real Estate

Real Estate

The Company has a credit facility including
a revolving line of credit (“RLOC”) and term loan with Rabo AgriFinance, Inc. (“Rabo”) totaling $95,500,000
at December 31, 2013. The revolving line of credit and term loan are collateralized by 43,991 acres of farmland and 12,280 acres
of additional real property containing approximately 8,600 acres of producing citrus groves.

The $60,000,000 RLOC bears interest at a floating
rate payable on the first day of each calendar quarter. The RLOC matures on October 1, 2020. At December 31, 2013, there was no
outstanding balance on the RLOC. The Company pays an annual commitment fee on the RLOC equal to 0.15% of the difference between
the annual average unpaid balance and the $60,000,000 loan commitment. The commitment fee is payable on February 1 of each year.
Commitment fees of approximately $83,000 were accrued at December 31, 2013.

The interest rate on the RLOC is based on the
one month LIBOR plus a spread. The spread is determined based upon our debt service coverage ratios for the preceding fiscal year
and can vary from 225 to 250 basis points. The rate is currently at LIBOR plus 225 basis points. On October 1, 2015, Rabo
may adjust the interest rate spread to any percentage above one month LIBOR. Rabo must provide a 30 day notice of the new spreads;
at that time, the Company has the right to prepay the outstanding balance.

8

The term loan requires quarterly payments of
interest at a floating rate of one month LIBOR plus 250 basis points. It also requires quarterly principal payments of $500,000
through October 1, 2020 when the remaining principal balance and accrued interest will be due and payable.

At December 31, 2013 and September 30,
2013, Alico was in compliance with all of its covenants under the Rabo loan agreement.

On October 10, 2012, the outstanding mortgage
note held by Farm Credit of Florida was paid in full. The payment included $1,794,000 for the principal balance and $66,000 for
a prepayment penalty which was included in interest expense on our consolidated statements of comprehensive income (loss). The
mortgage was collateralized by 7,680 acres of real estate used for farm leases, sugarcane and citrus production. The collateral
was released upon satisfaction of the mortgage.

Maturities of the Company’s debt were
as follows at December 31, 2013:

(in thousands)

Due within one year

$ 2,000

Due between one and two years

2,000

Due between two and three years

2,000

Due between three and four years

2,000

Due between four and five years

2,000

Due beyond five years

25,500

Total

$ 35,500

Interest costs expensed and capitalized to
property, buildings and equipment were as follows:

(in thousands)

Three Months Ended December 31,

2013

2012

Interest expense

$

269

$

367

Interest capitalized

29

17

Total

$

298

$

384

Note 6. Disclosures about reportable segments

The Company manages its land based upon its
primary usage and reviews its performance based upon three primary classifications – Citrus Groves, Improved Farmland and
Ranch and Conservation. In addition, it operates an Agricultural Supply Chain Management business that is not tied directly
to its land holdings and Other Operations that include leasing mines and oil extraction rights to third parties. The Company
presents its financial results and the related discussions based upon these five segments (Citrus Groves, Improved Farmland, Ranch
and Conservation, Agricultural Supply Chain Management and Other Operations). In the fourth quarter of fiscal year 2013,
the Company changed its internal structure to align with the way it manages its business operations. As a result, the Company has
realigned its financial reporting segments to match its internal operations. The Company has reclassified prior years to
conform to the fiscal year 2014 presentation. None of these changes affect the Company’s previously reported consolidated
results. The primary change in previously reported segment results is to reclassify the former Land Leasing and Rentals segment’s
revenues and expenses to the related land classifications. A description of the Company’s business segments is as follows:

·

Citrus Groves include activities related to planting, owning, cultivating and/or managing citrus groves in order to produce fruit for sale to fresh and processed citrus markets.

·

Agricultural Supply Chain Management and Support includes activities related to the purchase and resale of fruit, as well as, to value-added services which include contracting for the harvesting, marketing and

9

hauling of citrus.

·

Improved Farmland includes activities related to planting, owning, cultivating, managing and/or leasing improved farmland. Improved farmland is acreage that has been converted, or is permitted to be converted, from native pasture and which has various improvements including irrigation, drainage and roads.

Other Operations include activities related to rock mining royalties, oil exploration and other insignificant lines of business.

Intersegment sales and transfers are accounted
for by the Company as if the sales or transfers were to third parties at current market prices. Goods and services produced by
these segments are sold to wholesalers and processors in the United States which prepare the products for consumption. The Company
evaluates the segments performance based on direct margins from operations before general and administrative costs, interest expense
and income taxes, not including nonrecurring gains and losses.

The accounting policies of the segments are
the same as those described in Note 1, Description of the Business and Basis of Presentation. Total revenues represent sales to
unaffiliated customers, as reported in the Company’s Condensed Consolidated Statements of Operations. All intercompany transactions
have been eliminated.

10

Information by business segment is as follows:

(in thousands)

Three Months Ended December 31,

2013

2012

Revenues:

Citrus Groves

$

5,633

$

7,393

Agricultural Supply Chain Management

2,106

5,289

Improved Farmland

6,532

7,990

Ranch and Conservation

531

518

Other Operations

187

166

Intersegment Revenues

1,153

1,981

Eliminations

(1,153

)

(1,981

)

Total revenue

14,989

21,356

Operating expenses:

Citrus Groves

3,898

5,860

Agricultural Supply Chain Management

2,325

5,534

Improved Farmland

5,530

5,874

Ranch and Conservation

337

197

Other Operations

62

105

Total operating expenses

12,152

17,570

Gross profit:

Citrus Groves

1,735

1,533

Agricultural Supply Chain Management

(219

)

(245

)

Improved Farmland

1,002

2,116

Ranch and Conservation

194

321

Other Operations

125

61

Total gross profit

$

2,837

$

3,786

Capital expenditures:

Citrus Groves

$

1,943

$

277

Agricultural Supply Chain Management

33

4

Improved Farmland

3,473

5,527

Ranch and Conservation

743

1,768

Other Operations

4

73

Other capital expenditures

343

334

Total capital expenditures

$

6,539

$

7,983

Depreciation, depletion and amortization:

Citrus Groves

$

529

$

519

Agricultural Supply Chain Management

29

62

Improved Farmland

1,337

1,080

Ranch and Conservation

333

215

Other Operations

88

96

Other depreciation, depletion and amortization

186

180

Total depreciation, depletion and amortization

$

2,502

$

2,152

11

(in thousands)

December 31, 2013

September 30, 2013

Assets:

Citrus Groves

$

60,524

$

52,592

Agricultural Supply Chain Management

2,621

994

Improved Farmland

75,307

75,348

Ranch and Conservation

16,803

14,696

Other Operations

11,317

15,094

Other Corporate Assets

26,789

40,116

Total Assets

$

193,361

$

198,840

Note 7. Stockholders’ Equity

Effective November 1, 2008, the Company’s
Board of Directors authorized the repurchase of up to 350,000 shares of the Company’s common stock through November 2013
for the purpose of funding awards under its 2008 Incentive Equity Plan. In September 2013, the Board of Directors authorized the
repurchase of up to 105,000 shares of the Company’s common stock beginning in November 2013 and continuing through April
2018. The stock repurchases were made on a quarterly basis through open market transactions at times and in such amounts as the
Company’s broker determined subject to the provisions of SEC Rule 10b-18. The following table illustrates the Company’s
treasury stock transactions for the three months ended December 31, 2013:

(in thousands, except share amounts)

Shares

Cost

Balance at September 30, 2013

73,538

$

2,816

Purchased

35,333

1,371

Issued to Directors

(6,104

)

(222

)

Balance at December 31, 2013

102,767

$

3,965

Through December 31, 2013, the Company had
purchased zero shares and had available to purchase an additional 105,000 in accordance with its September 30, 2013 Board of Directors
repurchase authorization.

Stock-based compensation expense recognized
in the Condensed Consolidated Statements of Comprehensive Income (Loss) in general and administrative expenses was $525,000 and
$141,000 for the three months ended December 31, 2013 and 2012, respectively. Stock-based compensation is recorded for the Board
of Directors fees paid in treasury stock and the Long Term Incentive Compensation Plan restricted common stock awards. The amount
for the three months ended December 31, 2013 includes $184,000 related to the acceleration of vesting in accordance with the change
in control discussed below.

Long Term Incentive Plan

On May 26, 2011, the Company’s Board
of Directors approved the Long-Term Incentive Program as part of the 2008 Equity Incentive Plan. The Company approved the contingent
award of 152,403 shares of common stock to Named Executive Officers (the “NEOs”) of the Company. On May 26, 2011, 58,610
shares were granted to the NEOs other than the Chief Executive Officer (“CEO”) and on April 19, 2012, 93,793 shares
were awarded to the CEO under restricted stock award agreements.

All of the shares of restricted stock awarded
under the Long-Term Incentive Program vested automatically upon the acquisition by 734 Investors, LLC of a controller interest
in the Company. As a result, the Company will be required to issue 152,403 shares of treasury stock in January 2014, before withholdings
for income taxes. The Company has recognized $184,000 of stock-based compensation expense related to the acceleration of vesting
of these grants during the quarter ended December 31, 2013. In December 2013, the Company determined that it would repurchase half
of the gross shares awarded to NEOs other than the CEO totaling 58,610 shares immediately upon their issuance for the purpose of
retaining treasury shares for future issuance.

12

Dilution

For the three months ended December 31, 2013,
a weighted average of 67,000 unvested restricted stock units were excluded from the calculation of earnings per share because their
effect would be anti-dilutive. For the three months ended December 31, 2012 there were no equity instruments outstanding that had
a dilutive effect.

Note 8. Contingencies

The Company is also involved from time to time
in routine legal matters incidental to its business. When appropriate, the Company establishes estimated accruals for litigation
matters which meet the requirements of ASC 450— Contingencies. Based upon available information, the Company believes that
the resolution of such matters will not have a material adverse effect on its financial position or results of operations.

Note 9. Related Party Transactions

734 Investors and 734 Agriculture

On November 19, 2013, 734 Agriculture and its
affiliates, including 734 Investors, acquired all of the approximately 51% of Alico’s common stock then owned by Atlanticblue. 734
Investors now beneficially owns, directly or indirectly, approximately 51% of the outstanding shares of the Company’s common
stock and possesses the voting power to control the election of the Company’s Directors and any other matter requiring the
affirmative vote or consent of the Company’s shareholders. 734 Agriculture is the sole managing member of 734 Investors. By
virtue of their ownership percentage, 734 Investors and 734 Agriculture are able to elect all of the Directors and, consequently,
control Alico. Messrs. Brokaw and Trafelet are the two controlling persons of 734 Agriculture.

Silver Nip

On November 22, 2013, the Company
entered into an employee lease agreement with Mr. Wilson and Silver Nip (the “Silver Nip Agreement”). Silver Nip is
owned and controlled by Messrs. Brokaw, Trafelet and Wilson.

The Silver Nip Agreement provides,
subject to the terms and conditions set forth therein, for the Company to furnish Mr. Wilson’s services to Silver Nip to
perform the functions and services that Mr. Wilson has previously performed for Silver Nip prior to his resignation as CEO of Silver
Nip. The Silver Nip Agreement provides that Mr. Wilson will spend a majority of his working time performing functions and services
for the Company and that in no event will Mr. Wilson be required to take any action that he or the Company determines could conflict
with Mr. Wilson’s exercise of his fiduciary duties under applicable law owed to the Company or could interfere with the performance
of his duties as an executive officer of the Company. In exchange for furnishing Mr. Wilson’s services, Silver Nip has agreed
to pay to the Company the cash salary that would have been paid to Mr. Wilson pursuant to his previous employment arrangement with
Silver Nip, had that arrangement continued to be in force.

The Silver Nip Agreement provides
that it continues through December 31, 2013, but if neither the Company nor Silver Nip has provided the other with written notice
of an intention to terminate the Silver Nip Agreement at least three business days before December 31, 2013 (or any subsequent
renewal period), the Silver Nip Agreement will automatically renew for a one-month period. In addition, Silver Nip may terminate
the Silver Nip Agreement at any time upon 10 business days’ prior written notice to the Company. The description of the Silver
Nip Agreement is qualified in its entirety by reference to the complete terms and conditions of the agreement, which is listed
as an exhibit to the Company’s Current Report on Form 8-K filed on November 25, 2013. For the three months ended December
31, 2013 the Company received $15,000 under this agreement.

13

Atlanticblue

Prior to the Share Purchase transaction on
November 19, 2013, Atlanticblue owned approximately 51% of Alico’s common stock. By virtue of its ownership percentage, Atlanticblue
was able to elect all of the Directors and, consequently, control Alico. JD Alexander resigned March 31, 2012 as the President
and Chief Executive Officer of Atlanticblue and did not stand for re-election as a Director at the June 2012 Atlanticblue shareholders
meeting. In February 2010, JD Alexander was appointed Alico’s President and Chief Executive Officer, and he served on Alico’s
Board of Directors. Robert J. Viguet, Jr., an Alico Director, did not stand for re-election as a Director of Atlanticblue at its
June 2012 shareholders meeting. Dykes Everett was elected to the Alico Board of Directors at Alico’s February 2013 shareholders
meeting; he was nominated by Atlanticblue, where he serves as a Director.

Alico Fruit Company (“Alico Fruit”)
is currently marketing and/or purchasing citrus fruit from TRI-County Grove, LLC, a wholly owned subsidiary of Atlanticblue. During
the three months ended December 31, 2012, Alico Fruit marketed 30,233 boxes of fruit for approximately $251,000. Alico Fruit markets
citrus fruit for TRI-County Grove, LLC at the customary terms and rates the Company extends to third parties.

JD Alexander

On November 6, 2013, JD Alexander tendered
his resignation as Chief Executive Officer and as an employee of the Company, subject to and effective immediately after the Closing
of the Share Purchase transaction on November 19, 2013. Mr. Alexander’s resignation includes a waiver of any rights to any
payments under his Change-in-Control Agreement with the Company. At that time, the Company and Mr. Alexander entered into a Consulting
and Non-Competition Agreement under which (i) Mr. Alexander will provide consulting services to the Company during the two-year
period after the Closing, (ii) Mr. Alexander agreed to be bound by certain non-competition covenants relating to the Company’s
citrus operations and non-solicitation and non-interference covenants for a period of two years after the Closing, and (iii) the
Company will pay Mr. Alexander for such services and covenants $2 million in twenty-four monthly installments. Mr. Alexander also
agreed, in a separate side letter with the Company, not to sell or transfer the shares that will be awarded pursuant to his Restricted
Stock Award Agreement (other than to a family trust) for a period of two years after the Closing. Mr. Alexander also executed a
general release in favor of the Company.

Other

Mr. Charles Palmer, who served as a member
of the Board until his resignation became effective on November 19, 2013, leases approximately 2,300 acres from the Company for
a recreational purposes. He pays approximately $33,000 annually at the customary terms and rates the Company extends to third parties.

14

ITEM 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.

The following discussion and analysis should
be read in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere in this
Form 10-Q. Additional context can also be found in our Form 10-K for the fiscal year ended September 30, 2013, as filed with the
Securities and Exchange Commission (“SEC”) on December 9, 2013.

Cautionary Statement Regarding Forward-Looking Information

We provide forward-looking information in
this Quarterly Report, particularly in this Management’s Discussion and Analysis, pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements in this Quarterly Report that
are not historical facts are forward-looking statements. Forward-looking statements include, but are not limited to, statements
that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities
or other future events or conditions. These statements are based on our current expectations, estimates and projections about our
business based, in part, on assumptions made by our management. These assumptions are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially
from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks factors described
in our Annual Report on Form 10-K for the year ended September 30, 2013 and our Quarterly Reports on Form 10-Q.

Overview

We manage our land based upon its primary usage
and review its performance based upon three primary classifications – Citrus Groves, Improved Farmland and Ranch and Conservation.
In addition, we operate an Agricultural Supply Chain Management business that is not tied directly to our land holdings and Other
Operations that include leasing mines and oil extraction rights to third parties. We present our financial results and the
related discussions based upon these five segments (Citrus Groves, Improved Farmland, Ranch and Conservation, Agricultural Supply
Chain Management and Other Operations). In the fourth quarter of fiscal year 2013, we changed our internal operations to
align with the way we manage our business operations. As a result, we have realigned our financial reporting segments to match
our internal operations. We have reclassified prior years to conform to the fiscal year 2014 presentation. None of
these changes affect our previously reported consolidated results. The primary change in previously reported segment results
is to reclassify the former Land Leasing and Rentals segment’s revenues and expenses to the related land classifications.

We own approximately 130,800 acres of land
in six Florida counties (Alachua, Collier, Glades, Hendry, Lee and Polk), and operate five segments.

Segments

We operate five segments related to our various
land holdings.

·

Citrus Groves include activities related to planting, owning, cultivating and/or managing citrus groves in order to produce fruit for sale to fresh and processed citrus markets.

·

Agricultural Supply Chain Management and Support includes activities related to the purchase and resale of fruit, as well as, to value-added services which include contracting for the harvesting, marketing and hauling of citrus.

·

Improved Farmland includes activities related to planting, owning, cultivating, managing and/or leasing improved farmland. Improved farmland is acreage that has been converted, or is permitted to be converted, from native pasture and which may have various improvements including irrigation, drainage and roads.

Other Operations include activities related to rock mining royalties, oil exploration and other insignificant lines of business.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial
condition and results of operations are based upon our unaudited condensed consolidated financial statements which have been prepared
in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation
of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities,
revenues and expenses, and related disclosures of contingent assets and liabilities. We base these estimates on historical experience,
available current market information and on various other assumptions that management believes are reasonable under the circumstances.
Additionally we evaluate the results of these estimates on an on-going basis. Management’s estimates form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.

There have been no significant changes during
this reporting period to the policies and disclosures set forth in Part II, Item 7 in our Annual Report on Form 10-K for the
fiscal year ended September 30, 2013.

Recent Events

Recent Change in Control Transaction

On November 19, 2013, 734 Agriculture,
LLC (“734 Agriculture”) and its affiliates, including 734 Investors, LLC (“734 Investors”), completed the
previously announced purchase from Alico Holding, LLC, a company wholly owned by Atlantic Blue Group, Inc. (“Atlanticblue”),
of 3,725,457 shares of our common stock (the “Share Purchase”).

The common stock acquired by
734 Agriculture and its affiliates, including 734 Investors, represents approximately 51% of the Company’s outstanding voting
securities. On November 15, 2013, 734 Investors amended and restated its LLC operating agreement (the “LLC Agreement”)
to admit new members and to designate 734 Agriculture as the managing member, with authority to administer the affairs of 734 Investors,
including the voting and disposition of shares of common stock, subject to certain restrictions set forth therein. As a result,
upon the consummation of the Share Purchase, 734 Agriculture and its affiliates, including 734 Investors, acquired the voting power
to control the election of the Company’s Directors and any other matter requiring the affirmative vote or consent of the
Company’s shareholders.

Appointment of Directors;
Resignation of Directors

With the Closing of the Share
Purchase, the previously announced election of the following individuals to the Board of Directors became effective: Mr. George
R. Brokaw, Member of 734 Agriculture; Remy W. Trafelet, Manager of 734 Agriculture; W. Andrew Krusen, Jr., Chairman and CEO of
Dominion Financial Group; Benjamin D. Fishman, Managing Principal of Arlon Group; Henry R. Slack, former Chairman of the Board
of Terra Industries, Inc. and Senior Partner of Quarterwatch, LLC; Clayton G. Wilson, former CEO of 734 Citrus Holdings, LLC d/b/a
Silver Nip Citrus (“Silver Nip”) and Chairman of the Board of Latt Maxcy Corporation; and R. Greg Eisner, Head of Strategy
of Dubin & Company, LLC.

Ramon A. Rodriguez remained
on the Board of Directors and continues to serve as a member of the Board of Directors. In addition, Adam D. Compton, who previously
resigned subject to and effective upon the Closing of the Share Purchase, was re-elected to the Board of Directors on November
22, 2013.

16

Upon the Closing of the Share
Purchase, the following individuals ceased to be Directors of the Company pursuant to their previously disclosed resignations:
JD Alexander, Dykes Everett, Thomas H. McAuley, Charles L. Palmer, John D. Rood, and Gordon Walker, PhD. Mr. Robert J. Viguet,
Jr. resigned from the Board on November 21, 2013.

Appointment of Mr. Wilson
as the Company’s Chief Executive Officer

Upon the Closing of the Share
Purchase, Mr. Alexander ceased to be the Company’s CEO pursuant to his previously disclosed resignation. On November 22,
2013, the Board appointed Mr. Wilson to serve as the CEO, effective immediately.

17

Results of Operations

The following table sets forth a comparison
of results of operations for the three months ended December 31, 2013 and 2012:

(in thousands)

Three Month Ended

December 31,

Change

2013

2012

$

%

Operating revenues:

Citrus Groves

$

5,633

$

7,393

$

(1,760

)

(23.8

)%

Agricultural Supply Chain Management

2,106

5,289

(3,183

)

(60.2

)%

Improved Farmland

6,532

7,990

(1,458

)

(18.2

)%

Ranch and Conservation

531

518

13

2.5

%

Other Operations

187

166

21

12.7

%

Total operating revenues

14,989

21,356

(6,367

)

(29.8

)%

Gross Profit:

Citrus Groves

1,735

1,533

202

13.2

%

Agricultural Supply Chain Management

(219

)

(245

)

26

(10.6

)%

Improved Farmland

1,002

2,116

(1,114

)

(52.6

)%

Ranch and Conservation

194

321

(127

)

(39.6

)%

Other Operations

125

61

64

104.9

%

Total gross profit

2,837

3,786

(949

)

(25.1

)%

Corporate, general and

administrative expenses

3,827

1,808

2,019

111.7

%

(Loss) income from operations

(990

)

1,978

(2,968

)

(150.1

)%

Other expense, net

(261

)

(304

)

43

(14.1

)%

(Loss) income before income taxes

(1,251

)

1,674

(2,925

)

(174.7

)%

Income (benefit) expense

(547

)

636

(1,183

)

(186.0

)%

Net (loss) income

$

(704

)

$

1,038

$

(4,108

)

(395.7

)%

A discussion of our segment results of operations follows.

18

Citrus Groves

The table below presents key operating measures
for the three months ended December 31, 2013 and 2012:

(in thousands, except per box and per pound solid data)

Three Month Ended

December 31,

Change

2013

2012

$

%

Revenue From:

Early and Mid Season

$

4,439

$

6,560

$

(2,121

)

(32.3

)%

Valencias

—

—

—

NM

Fresh Fruit

654

814

(160

)

(19.7

)%

Other

540

19

521

2742.1

%

Total

$

5,633

$

7,393

$

(1,760

)

(23.8

)%

Boxes Harvested:

Early and Mid Season

447

740

(293

)

(39.6

)%

Valencias

—

—

—

NM

Total Processed

447

740

(293

)

(39.6

)%

Fresh Fruit

50

73

(23

)

(31.5

)%

Total

497

813

(316

)

(38.9

)%

Pound Solids Produced:

Early and Mid Season

2,611

4,295

(1,684

)

(39.2

)%

Valencias

—

—

—

NM

Total

2,611

4,295

(1,684

)

(39.2

)%

Pound Solids per Box:

Early and Mid Season

5.84

5.80

0.04

0.6

%

Valencias

NM

NM

NM

NM

Price per Pound Solid:

Early and Mid Season

$

1.70

$

1.53

$

0.17

11.3

%

Valencias

NM

NM

NM

NM

Price per Box:

Fresh Fruit

$

13.08

$

11.15

$

1.93

17.3

%

Operating Expenses:

Cost of Sales

$

2,554

$

3,605

$

(1,051

)

(29.2

)%

Harvesting and Hauling

1,218

2,203

(985

)

(44.7

)%

Other

126

52

74

142.3

%

Total

$

3,898

$

5,860

$

(1,962

)

(33.5

)%

We sell our Early and Mid-Season and Valencia
oranges to processors that convert the majority of the citrus crop into orange juice. They generally buy their citrus on a pound
solids basis, which is the measure of the soluble solids (sugars and acids) contained in one box of fruit. Fresh Fruit is generally
sold to packing houses that purchase their citrus on a per box basis. Our Operating Expenses consist primarily of Cost of Sales
and Harvesting and Hauling. Cost of Sales represents the cost of maintaining our citrus groves for the preceding calendar year
and does not vary in relation to production. Harvesting and Hauling represents the cost of bringing citrus product to processors
and varies based upon the number of boxes produced.

The declines for the three months ended December
31, 2013 in boxes harvested, pound solids produced and gross profit are being driven primarily by a delay in the commencement of
harvesting versus the same period in 2012 to allow fruit on the tree to mature.

The USDA, in its January 10, 2014
Citrus Forecast, indicated that it currently expects the Florida orange crop to decline by 18,600,000 boxes or approximately
14% versus the prior year. We currently expect our 2013/2014 crop’s decrease to be in-line with the currently estimated
statewide decrease.

19

Agricultural Supply Chain Management

The table below presents key operating measures
for the three months ended December 31, 2013 and 2012:

(in thousands, except per box and per pound solid data)

Three Month Ended

December 31,

Change

2013

2012

$

%

Purchase and Resale of Fruit:

Revenue

$

1,528

$

4,132

$

(2,604

)

(63.0

)%

Boxes Sold

157

530

(373

)

(70.4

)%

Pound Solids Sold

899

2,993

(2,094

)

(70.0

)%

Pound Solids per Box

5.73

5.65

0.08

1.4

%

Price per Pound Solids

$

1.70

$

1.38

$

0.32

23.1

%

Value Added Services:

Revenue

$

302

$

743

$

(441

)

(59.4

)%

Value Added Boxes

115

459

(344

)

(74.9

)%

Other Revenue

$

276

$

414

(138

)

(33.3

)%

The declines in Purchase and Resale of Fruit
revenue, boxes sold and pound solids sold, as well as the declines in Value Added Services revenue and boxes, are all being driven
primarily by statewide delays in commencement in harvest and declines in production as discussed above.

The decline in Alico Fruit Company gross profit
relates primarily to the changes in revenue outlined above.

Improved Farmland

The table below presents key operating measures
for the three months ended December 31, 2013 and 2012:

20

(in thousands, except per net standard ton and per acre data)

Three Month Ended

December 31,

Change

2013

2012

$

%

Revenue From:

Sale of Sugarcane

$

6,022

$

7,491

$

(1,469

)

(19.6

)%

Molasses Bonus

304

293

11

3.8

%

Land Leasing

205

183

22

12.0

%

Other

1

23

(22

)

(95.7

)%

Total

$

6,532

$

7,990

$

(1,458

)

(18.2

)%

Net Standard Tons Sold

204

190

14

7.4

%

Price Per Net Standard Ton:

Sale of Sugarcane

$

29.52

$

39.43

$

(9.91

)

(25.1

)%

Molasses

$

1.49

$

1.54

$

(0.05

)

(3.4

)%

Net Standard Tons/Acre

34.96

38.06

(3.10

)

(8.1

)%

Operating Expenses:

Cost of Sales

$

4,151

$

4,389

$

(238

)

(5.4

)%

Harvesting and Hauling

1,278

1,368

(90

)

(6.6

)%

Land Leasing Expenses

101

117

(16

)

(13.7

)%

Total

$

5,530

$

5,874

$

(344

)

(5.9

)%

Acres used to produce sugarcane will increase
to 16,728 in fiscal year 2014 from 13,272 in fiscal year 2013. The increase in net standard tons sold is primarily related to harvesting
approximately 800 more acres in the three months ended December 31, 2013 versus the same period of the prior year, partially offset
by an 8.1% decrease in net standard tons per acre. The increase in production is more than offset by the decrease in price per
net standard ton that has resulted from changes in market conditions in the first quarter of fiscal year 2014 versus the first
quarter of fiscal year 2013. Our Operating Expenses consist primarily of Cost of Sales and Harvesting and Hauling. Cost of Sales
represents the cost of maintaining our sugarcane land for the preceding calendar year and does not vary in relation to production.
Harvesting and Hauling represents the cost of bringing sugarcane product to our processor and varies based upon the number of net
standard tons produced.

The decrease in gross profit is related primarily
to the decrease in revenues discussed above, partially offset by a 5.6% decrease in growing costs per acre and a 13.1% decrease
in harvest and hauling costs per net standard ton versus the three months ended December 31, 2012 which relates primarily to the
elimination of long-haul charges related to the transportation of sugarcane via truck.

Ranch and Conservation

The table below presents key operating measures
for the three months ended December 31, 2013 and 2012:

21

(in thousands, except per pound data)

Three Month Ended

December 31,

Change

2013

2012

$

%

Revenue From:

Sale of Calves

$

236

$

158

$

78

49.4

%

Sale of Culls

1

3

(2

)

(66.7

)%

Land Leasing

245

244

1

0.4

%

Other

49

113

(64

)

(56.6

)%

Total

$

531

$

518

$

13

2.5

%

Pounds Sold:

Calves

141

120

21

17.5

%

Culls

1

11

(10

)

(90.9

)%

Price Per Pound:

Calves

$

1.67

$

1.32

$

0.36

27.1

%

Culls

$

1.00

$

0.27

$

0.73

266.7

%

Operating Expenses:

Cost of Calves Sold

$

286

$

106

$

180

169.8

%

Cost of Culls Sold

1

4

(3

)

(75.0

)%

Land Leasing Expenses

57

85

(28

)

(32.9

)%

Other

(7

)

2

(9

)

(450.0

)%

Total

$

337

$

197

$

140

71.1

%

Calves are generally sold to market in the
fourth quarter of each fiscal year. Results in each of the first, second and third quarters of the fiscal years are immaterial
and generally non-recurring in nature and comparison of results is not meaningful.

Other Operations

The results of the Other Operations segment
for the three months ended December 31, 2013 are in-line with the same period of the prior year.

General and Administrative

The increase in general and administrative
expenses for the three months ended December 31, 2013 versus the same period of the prior year relates primarily to costs incurred
related to the change in control described above in “Recent Events,” which totaled $1,745,000 and included $184,000
for the acceleration of the vesting of the Long-Term Incentive Plan awards and $849,000 for the cost of Director and Officer insurance
for the departing Directors.

Other Income (Expense), net

Other Income (Expense), net for the three months
ended December 31, 2013 are relatively in-line with the same period of the prior year.

Income Tax Expense

Our effective tax rates were 43.7% and 38.0%
for the three months ended December 31, 2013 and 2012, respectively. The change in rates relates primarily to the non-deductible
nature of projected political contributions for fiscal year 2014 and limitations on certain deductions related to the vesting of
the long-term incentive grants.

22

Seasonality

Historically, the second and third quarters
of our fiscal year generally produce the majority of our annual revenue and our working capital requirements are typically greater
in the first and fourth quarters of our fiscal year coinciding with our planting cycles. Because of the seasonality of our business,
results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

Liquidity and Capital Resources

A comparative balance sheet summary is presented in the following
table:

December 31,

September 30,

(in thousands)

2013

2013

Change

Cash and cash equivalents

$

13,470

$

24,583

$

(11,113

)

Investments

$

261

$

260

$

1

Total current assets

$

55,608

$

59,795

$

(3,272

)

Total current liabilities

$

9,006

$

11,491

$

(1,570

)

Working capital

$

46,602

$

48,304

$

(1,702

)

Total assets

$

193,361

$

198,840

$

(4,564

)

Notes payable

$

35,500

$

36,000

$

(500

)

Current ratio

6.17 to 1

5.20 to 1

We believe that our current cash position,
revolving credit facility and the cash we expect to generate from operating activities will provide us with sufficient liquidity
to satisfy our working capital requirements and capital expenditures for the foreseeable future. We have a $60,000,000 revolving
line of credit (“RLOC”) which was available for our general use at December 31, 2013. See Item 1. Financial Statement,
Note 5. Long-Term Debt in the Notes to the Condensed Consolidated Financial Statements (Unaudited).

The decrease in cash and cash equivalents was
primarily due to the following factors:

·Capital expenditures of $6,539,000,

·Cash used in operations of $4,088,000,

·Treasury stock purchases of $1,371,000,

·Dividends paid of $584,000, and

·Principal payments on debt of $500,000

These decreases in cash and equivalents were
partially offset by the return on investment in Magnolia of $1,966,000.

Net Cash Used in Operating Activities

The following table details the items contributing
to Net Cash Used in Operating Activities for the three months ended December 31, 2013 and 2012:

(in thousands)

Three Months Ended December 31,

2013

2012

Change

Net (Loss) Income

$

(704

)

$

1,038

$

(1,742

)

Depreciation and Amortization

2,502

2,152

350

Net Loss (Gain) on Sale of Property and Equipment

29

(28

)

57

Other Non-Cash Income Expenses

495

104

391

Change in Working Capital

(6,410

)

(6,205

)

(205

)

Cash used in operations

$

(4,088

)

$

(2,939

)

$

(1,149

)

23

The factors contributing to the decrease in
net income (loss) for the three months ended December 31, 2013, versus the same period of the prior year are discussed in “Results
of Operations.” Depreciation and Amortization increased versus the three months ended December 31, 2012, due to purchases
of depreciable property and equipment during the last twelve months as well as additional capitalized sugarcane planting costs.

Due to the seasonal nature of our business,
working capital requirements are typically greater in the first and fourth quarters of our fiscal year coinciding with our planting
and harvest cycles. Cash flows from operating activities typically improve in our second and third fiscal quarters as we harvest
our crops.

Net Cash Used In Investing Activities

The following table details the items contributing
to Net Cash Used in Investing Activities for the three months ended December 31, 2013 and 2012:

(in thousands)

Three Months Ended December 31,

2013

2012

Change

Purchases of property and equipment:

Sugarcane planting

$

(2,690

)

$

(3,174

)

$

484

Improvements to farmland

(757

)

(965

)

208

Citrus nursery

(1,380

)

(3

)

(1,377

)

Citrus tree development

(194

)

(158

)

(36

)

Breeding herd purchases

(704

)

(1,768

)

1,064

Rolling stock, equipment and other

(814

)

(1,915

)

1,101

Total

(6,539

)

(7,983

)

1,444

Disposal of property and equipment

1

2,591

(2,590

)

Return on investment in Magnolia

1,966

—

1,966

Other

2

10

(8

)

Cash used in investing activities

$

(4,570

)

$

(5,382

)

$

2,256

The decrease in purchases of property and equipment
relate primarily to a decrease in the number of cows and bulls purchased to augment our breeding herd, a decrease in purchases
of rolling stock, equipment and other assets related to the completion of the sugarcane expansion in fiscal year 2013 and a decrease
in the number of acres of sugarcane planted, partially offset by capital expenditures related to the building of our citrus tree
nursery in fiscal year 2014.

The increase in the return on investment in
Magnolia versus the first three months of fiscal year 2013 relates primarily to the reinstatement of cash distributions by Magnolia
after its conversion of a large portion of its tax certificate portfolio to tax deeds.

Net Cash Used In Financing Activities

The following table details the items contributing
to Net Cash Used in Financing Activities for the three months ended December 31, 2013 and 2012:

(in thousands)

Three Months Ended December 31,

2013

2012

Change

Principal payments on notes payable

$

(500

)

$

(2,400

)

$

1,900

Treasury stock purchases

(1,371

)

(1,411

)

40

Dividends paid

(584

)

(294

)

(290

)

Cash used in financing activities

$

(2,455

)

$

(4,105

)

$

1,650

24

The decrease in principal payments on notes
payable for the three months ended December 31, 2013 relates to the payoff of the Farm Credit Mortgage in the first three months
of fiscal year 2013 (see “Note 5. Long-Term Debt” in the Notes to Condensed Consolidated Financial Statements).

Purchase Commitments

Alico, through its wholly owned subsidiary
Alico Fruit, enters into contracts for the purchase of citrus fruit during the normal course of its business. The remaining obligations
under these purchase agreements totaled approximately $23,648,000 at December 31, 2013 for delivery in fiscal years 2014 through
2016. All of these obligations are covered by sales agreements. Alico’s management currently believes that all committed
purchase volume will be sold at cost or higher.

Contractual Obligations and Off Balance
Sheet Arrangements

There have been no material changes during
this reporting period to the disclosures set forth in Part II, Item 7 in our Form 10-K for the fiscal year ended September 30,
2013.

ITEM 3. Quantitative and Qualitative
Disclosures about Market Risk

There have been no material changes during
this reporting period in the disclosures set forth in Part II, Item 7A in our Form 10-K for the fiscal year ended September 30,
2013.

ITEM 4. Controls and Procedures

(a) Evaluation of disclosure controls and
procedures

As of the end of the period covered by this
report, an evaluation, as required by Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934 as amended (“Exchange
Act”), was carried out under the supervision and with the participation of our management, including the Chief Executive
Officer and the Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer have concluded that the design and operation of our disclosure controls
and procedures are effective to ensure that all information required to be disclosed in the reports that we file or submit under
the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
forms, and to provide reasonable assurance that information required to be disclosed by us in such reports is accumulated and communicated
to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.

(b) Changes in internal control over financial
reporting

There have been no changes in our internal
control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15(f)
or Rule 15d-15(f) under the Exchange Act that occurred during our last fiscal quarter that have materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

There have been no material changes in the
risk factors set forth in Part 1, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year
ended September 30, 2013.

ITEM 2. Unregistered Sales of Equity
Securities and Use of Proceeds.

There were no sales of unregistered equity
securities during the period.

The Board of Directors has authorized the repurchase
of up to 105,000 shares of our common stock from shareholders. Through December 31, 2013, the Company had purchased zero shares
and had available to purchase an additional 105,000 in accordance with its Board of Directors repurchase authorization.

Total Number of Shares Purchased

Average Price Paid Per Share

Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs(1)

Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs

Month of October 2013

35,333

$

38.83

35,333

—

(1)We had various arrangements with UBS Investment Bank (“UBS”) between September 27, 2012 and November 1, 2013
to purchase securities under an authorization in accordance with the timing, price and volume restrictions contained in sections
(b)(2)-(4) of Rule 10b-18. During the period from September 27 through November 1, 2013, UBS agreed to purchase securities according
to the various authorizations. The limit prices ranged from less than or equal to $31.00 per share to less than or equal to $40.00
per share at various times.

Denotes a management contract or compensatory plan, contract or arrangement.

**

In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.

28

SIGNATURES

Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Denotes a management contract or compensatory plan, contract or arrangement.

**

In accordance with Rule 406T of Regulation S-T, these XBRL (eXtensible Business Reporting Language) documents are furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.